RRSP contribution limit

There is an RRSP deduction limit that determines how much you can contribute to an RRSP. You’re allowed to contribute up to 18% of your previous year’s earned income, up to a maximum amount set each year by the Income Tax Act and Regulations. Your limit may be higher if you have unused contribution room from previous years.

How much RRSP room you have can depend on several factors including: 

• How much unused contribution room you have from previous years 
• Whether you contribute to or leave a pension plan
• Whether you’ve over-contributed in previous years
• Your earned income from the previous year

Learn more about how much you can contribute to an RRSP

The recommended way to determine your RRSP contribution limit is to review the Notice of Assessment (NOA) that the Canada Revenue Agency (CRA) sends to you each year. The NOA is sent to you after processing your tax return. Your contribution room will subtract any pension adjustment amounts you contributed last year and add any unused contribution room from previous years.

You can also sign in to your CRA account to view your limit on your Notice of Assessment

An overcontribution (also called an excess contribution) occurs when you contribute more to your RRSP (or spousal RRSP) than your RRSP deduction limit. 

• If you overcontribute by $2,000 or less: There is no tax penalty, but you can’t deduct the excess contribution until a later year when you have RRSP contribution room. Only RRSP owners who will turn or have turned age 18 and older during the year can take advantage of this $2,000 excess contribution room. 
• If you overcontribute by more than $2,000: There are tax penalties. You will have to  pay a penalty tax equal to 1% per month on the amount of the overcontribution exceeding $2,000 until:
  • the overcontribution is withdrawn, or 
  • until a later year when you have enough contribution room to cover the overcontribution.

If you are under age 18 during the year of the overcontribution, you don’t qualify for the $2,000 buffer and you’ll have to pay the 1% per month penalty tax on the entire overcontribution until it is withdrawn or you turn 18 years of age. You’ll still owe the penalty for the months your RRSP had excess contributions.

Note: If you don’t correct your overcontribution before the end of the year it will reduce the amount you can contribute the following year  . This doesn’t negate any penalty tax incurred for the period of the overcontribution though.

Learn how to fix an RRSP or TFSA over-contribution

Is there a minimum age for contributing to an RRSP?

Under the Income Tax Act, there’s no minimum age for contributing to an RRSP – as long as  you have available RRSP contribution room.  

However, there are some restrictions on opening and using an RRSP, based on your age:

• Only RRSP holders aged 18 and over can take advantage of the $2,000 excess contribution room without paying a penalty tax.
• Some financial institutions have product and investment restrictions. For example, you can’t hold a mutual fund in an RRSP until you reach the age of majority in your province or territory.
• Provincial laws have age requirements for owning property. For example, you may not be able to access your RRSP money under the Home Buyer’s Plan (HBP) if you are under the age of majority in your province or territory.

Connect with a Sun Life advisor for more detailed information

Is there a maximum age for contributing to an RRSP?

December 31 of the year you turn age 71 is the last day that you can contribute to any RRSP that you own. After that day, you can no longer own an RRSP, much less contribute to one. 

However, you may contribute to your spouse or common law partner’s spousal RRSP, until the end of the year they turn age 71 (this is provided you have available RRSP contribution room).

Learn more about spousal RRSPs